I am currently eating my hat..I wrote on my afternoon round up on Friday that if the Dow dropped only 10 points I would eat my hat..and very tasty it was too..I was certainly expecting some more violent moves out of the US after a 2000 point range on the Nikkei and a 200 point drop on our market. So up 8 and a small fall on the S&P 500 was worthy of a hat!

Last week was pretty violent in its falls and maybe the weekend circuit breaker will help us stabilise…..Asian markets have been weighing on ours and overseas sellers have taken the upper hand….the US and UK are closed tonight for public holidays so we may get some breathing space. Overseas guys though have built up their holdings in high yielders over a long period of time..it may take more than two days to get out..remember my strategy has always been that the market will go sideways to down for the next 3 or 4 months..we need to get the election out of the way ..and the risk in the World do appear to be building up again..no one is going to be happy when Uncle Ben stops pumping in money..

I suspect though it will be quiet and maybe a tad higher but my call on Friday was so far off it’s not funny!! So probably will be wrong again today!!

Idea of the Day

Now yield has suddenly gone out of fashion…not sure why myself..good strong dividend flows in a sustainable growing company are NOT a bad thing…of course the banks have run pretty hard but they have come back a way now too…2 weeks ago ANZ were knocking on 33 bucks ,now they are 27.70,NAB were 34 now they are 32,CBA was 73 odd now its 69 and WBC was 34 now its 30…these are pretty reasonable falls…over 10% for some. Does start to make them look a little more attractive…now the reasons why they have collapsed are many and various, slowing local economy, over priced to start with and Aussie dollar falls helping International punters make the decision to leave the party far easier! BUT at some stage it’s going to be right to start to buy these babies again…WBC are now yielding 5.7% fully franked and that’s without the special dividend potential again..and NAB are still cum div..buy now you get three dividends in 13 months..ex on 30th 93 cents…so that is a potential 2.70 in 13 months or 8.6% fully franked in that time…get the idea??And if the bears are right and the economy is falling into a hole, well what will the RBA do ? Cut rates and what will that mean for the banks ?..more attractive..and there’s TLS too 5.7% yield fully franked…sense will return at some stage but sellers will still be around for a little while longer.Still a wise man once said to me you can only buy things when someone is selling!!

Things to make me go mmmmm!

1.Crown chairman James Packer has continued his aggressive campaign against rival Echo Entertainment, questioning how the casino company will fund its proposed Sydney development.

2.David Jones is expected to report further weakness in sales for the third quarter as a warm autumn crimps seasonal fashion demand and shoppers fail to respond to interest rate cuts.

3.Nobel Prize-winning economist Joseph Stiglitz said it would be premature for the U.S. Federal Reserve to reduce monetary stimulus even if there’s little evidence it helped the world’s largest economy. “It’s the only stimulus,” the Columbia University professor said in an interview at the World Economic Forum in Jordan May 25. “Clearly the economy is not back to normal, and to accept this as the new normal would be really wrong.”

4.Australia may lose A$100 billion of potential liquefied natural gas projects to East Africa and North America unless costs in the nation are reduced, according to an industry group.

“Australia’s attractiveness as a place to invest is under enormous pressure,” the Australian Petroleum Production & Exploration Association said today in a statement before its conference scheduled to start in Brisbane tomorrow.

6.Bank of Japan Governor Haruhiko Kuroda backed “bullish” views on asset markets and said the nation could cope with rising interest rates after a one-day slump in the stock market last week and volatility in bonds.There are no signs investors have “excessively bullish expectations,” the 68-year-old Kuroda said in Tokyo yesterday. He cited an April BOJ report indicating rates could rise by between one and three percentage points in an improving economy without causing instability.

7.And in some rare sense from the Zombies the proposed ban on Olive Oil being served in restaurants in cruets or refillable bottles has been withdrawn…scarily the bureaucrats can make up laws under a procedure known as “comitology” which allows legislation to be passed into law automatically without majority support from the 27 member states. Common sense prevailed for a change..although it’s not all that common in Europe!!

And finally….

A blonde lady motorist was about two hours from San Diego when she was flagged down by a man whose truck had broken down. The man walked up to the car and asked, “Are you going to San Diego ?”

“Sure,” answered the blonde, “do you need a lift?”

“Not for me. I’ll be spending the next three hours fixing my truck. My problem is I’ve got two chimpanzees in the back which have to be taken to the San Diego Zoo. They’re a bit stressed already so I don’t want to keep them on the road all day. Could you possibly take them to the zoo for me?

I’ll give you $100 for your trouble.”

“I’d be happy to,” said the blonde. So the two chimpanzees were ushered into the back seat of the blonde’s car and carefully strapped into their seat belts, and off they went.

Five hours later, the truck driver was driving through the heart of San Diego when suddenly he was horrified! There was the blonde walking down the street, holding hands with the two chimps, much to the amusement of a big crowd. With a screech of brakes he pulled off the road and ran over to the blond. “What the hell are you doing here?” he demanded, “I gave you $100 to take these chimpanzees to the zoo.”

“Yes, I know you did,” said the blonde, “but we had money left over so now we’re going to Sea World.

Have a great day

Clarence

XXX

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